Monthly Jobs Report Came Out Yesterday

And the report is that the U.S. Added 467,000 Jobs in January, which well above the estimates.

The effect of adjustments

As I have noted I think that the seasonal adjustments have been f%$#ed upped by the pandemic, and we have some useful numbers, and some chart pr0n, to illustrate the just how significant these adjustments are.

I don’t believe that the BLS is juicing the numbers, as the author does at the link, but I do believe that these adjustments have become decoupled from our new reality.

It’s clear that SOME sort of adjustment is required for month to month variations, it’s clear that under any circumstances employment will fall from December to January because of seasonal employment to accommodate the holiday shopping season, for example, but the actual values of these adjustments need to be reevaluated. They are based on history that is connected to a very different employment environment:

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The numbers on the left in the graph below are the actual total numbers that came in as reported in December (blue) and now January (red). You can see January’s actual numbers dropped 2.8 million from December’s. The numbers on the right are the official reported totals as adjusted by the BLS:

You can see, December’s total payroll (numbers in thousands) got adjusted way down (blue bar on the left side of the graph compared to blue bar on the right) while January got seasonally adjusted way up (red bar on the left to red bar on the right), resulting in an apparent rise from December to January in the final adjusted numbers of +467,000 jobs. That means the entire unexpectedly large job gain happened due to absolutely massive seasonal adjustments created by the BLS that turned a jaw-dropping plunge into a nice, healthy rise.

It’s clear that there are millions of jobs that ended when the holiday shopping season ends, and this needs to be accounted for.